Delta Air Lines, Inc. (NYSE: DAL) intends to acquire up to an additional 32 percent of the outstanding capital stock of Grupo Aeromexico S.A.B. de C.V. through a cash tender offer for MXP$43.59 per share. This investment will strengthen the airlines’ partnership, provide more travel options for customers in the U.S. and Mexico and deliver the industry’s best customer experience.
Currently, Delta owns approximately 4.1 percent of the outstanding shares of Grupo Aeromexico and holds an option to acquire an additional 8.1 percent. Separately, the Delta pension trust holds options to acquire approximately 4.6 percent of Grupo Aeromexico. Following completion of the tender offer, Delta and the Delta pension trust collectively would own and/or have options to acquire up to a total of 49 percent of the outstanding shares of Grupo Aeromexico.
“This new investment demonstrates Delta’s confidence in Mexico’s future and deepens our relationship with Aeromexico, cementing Delta’s long-term commitment to the customers we serve to, from and through Latin America,” said Delta President Ed Bastian.
Delta intends to commence the tender offer once required regulatory approvals in Mexico and the United Stateshave been obtained. The tender offer will be subject to terms to be disclosed and customary closing conditions, including the acquisition by Delta of a minimum number of shares in the tender offer. The transaction also is subject to approval by the Boards of Directors of Delta and Grupo Aeromexico.
Delta and Aeromexico launched their first codeshare in 1994. In 2011, Delta entered into an enhanced commercial agreement with Aeromexico, and in 2012, Delta invested USD$65 million in shares of Grupo Aeromexico, the parent company of Aeromexico. In March, Delta and Aeromexico filed an application with theU.S. Department of Transportation seeking antitrust immunity for a new joint venture on flights between the United States and Mexico. The request also was submitted for approval to the Mexican antitrust authorities, the Comision Federal de Competencia Economica (Federal Economic Competition Commission). (Original Source)
Shares of Delta Air Lines closed today flat. DAL has a 1-year high of $52 and a 1-year low of $34.61. The stock’s 50-day moving average is $48.72 and its 200-day moving average is $45.30.
On the ratings front, Delta Air has been the subject of a number of recent research reports. In a report issued on October 21, Argus analyst John Staszak assigned a Buy rating on DAL, with a price target of $58, which represents a potential upside of 21.5% from where the stock is currently trading. Separately, on October 5, Deutsche Bank’s Michael Linenberg maintained a Buy rating on the stock and has a price target of $51.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, John Staszak and Michael Linenberg have a total average return of 14.4% and 25.8% respectively. Staszak has a success rate of 69.1% and is ranked #59 out of 3849 analysts, while Linenberg has a success rate of 68.0% and is ranked #30.
Overall, 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $54.50 which is 14.1% above where the stock opened today.
Delta Air Lines Inc provides scheduled air transportation for passengers and cargo throughout the United States and around the world. The Company’s business segments are airline and refinery.